New Zealand entrepreneurs and senior managers do not follow the manual for project management and hence suffer consistent failures, according to a recent Project Management Survey.
The first KPMG Survey, conducted in August 2010, found that 60% of the companies failed to measure the return on their investment in projects, while more than 25% did not even have strategic reviews in place.
The firm used a 22-question survey instrument, providing multiple-choice and open-response. Participants from 100 companies included officials involved in the high-level management or governance of projects and programmes, across a broad spectrum of commercial organisations.
“About 70% of our respondents said they had experienced at least one project failure during the past 12 months. Projects undertaken by New Zealand companies often perform poorly in lack of timely delivery, cost (project runs over budget), or inability to achieve the stated deliverables,” the Survey said.
More than half the companies surveyed said they did not consistently achieve stated project deliverables, while only a third said they prepared a Business Case for all their projects.
The Survey made some startling revelations, placing New Zealand in poor light in the field of project management.
A majority of companies did not understand or assess the benefits management practices in their organisation.
This reflects organisations’ inability to translate significant investments in projects, into real business value.
“Almost 98% of the respondents said they had completed less than five projects during the past 12 months. However, the amount of money spent was significant, with 44% saying that they had spent $15 million. About 68% of the companies surveyed said they did not always have an effective sponsor to provide clear direction for the project,” it said.
Key topics examined included project governance, Business Case management, and benefits realisation.
Perry Woolley, a KPMG Director who specialises in Project Management, said most organisations were far from being business-like in the way they conduct projects and for many, embarking on a project appears to be a ‘leap of faith’, in the hope, rather than the expectation, of delivering on time, on budget.
“The productivity and profits of New Zealand companies are being impacted by their inability to consistently deliver projects that fulfil the expected objectives.
“In the current economic environment, value for money is a priority,” he said.
Mr Woolley said, while many companies had cut back discretionary spending in recent times, some could no longer hold off essential projects.
Companies must be inventive and competitive to survive, while at the same time avoiding investments that do not pay off.
“Effective project management practices help control the added risks that project activity introduces to normal business practice,” he said.
Gina Barlow, the Firm’s Project Advisory Services Director said lack of benefits management was concerning and that if organisations did not measure the benefits of their projects, they would not be able to assess if the investment was worthwhile.
“Organisations need to realise that doing the right project is just as important as doing the project right,” she said.
Ms Barlow said 50% of the respondents said that their projects did not consistently achieve the results or targets and that many projects performed poorly in at least one of the following areas, including timely delivery, cost (project runs over budget), or inability to achieve the stated deliverables.
Mr Woolley and Ms Barlow however said it was not all gloom and doom.
“Our Survey also reveals some high-performing organisations from public and private sectors, cover the full range of organisational sizes, and spend varying amounts of money,” they said.
